U.S. rice farmers involved in the GM rice-related settlement with Bayer Cropscience will receive checks early in 2012. This news comes after a Dec. 15 announcement that the claims administrator had determined the settlement’s acreage threshold -- 85 percent of the average number of planted rice acres from 2006 to 2009 – had been met through farmer/landlord sign-ups.
Last June, a $750 million settlement was finalized to compensate farmers for losses associated with the 2006 discovery of trace amounts of Bayer-owned GM traits in exported U.S. rice. Due to the unapproved traits, farmers and others in the rice industry lost money as markets dived and exports to Europe declined.
For more, see here.
In a related development, the Arkansas Supreme Court ruled a state law capping punitive damage awards at $1 million is unconstitutional. That means several major punitive damage figures against Bayer -- including a state-record $140 million to Riceland last spring and, previously, a $50 million award to a group of Arkansas farmers in Lonoke County – will stand. The farmer group had appealed to the court after the jury award ran into the state law passed in 2003 as “tort reform.”
For more, see here.
A day after claims administrator announcement, Farm Press spoke with Don Downing, co-lead plaintiff attorney with St. Louis-based law firm Gray, Ritter & Graham, about the met threshold, the claims process and tax implications. Among his comments:
On meeting the 85 percent threshold…
“The 85 percent threshold has been met and certified by the claims administrator. It’s official now and Bayer is legally obligated to make the settlement payments under the settlement agreement.
“The percentage that was certified as of (Dec. 15) was 86.36 percent. There are still claims being processed so we anticipate that number will go up some, although we aren’t sure how much.”
On what will happen now…
“Under the settlement agreement, there are three pots of money.
The market-loss money is under Pot One. The initial market-loss payments will go out to farmers early in January.
“Under the settlement agreement, the market-loss payments were $120 per acre for 2006, $80 per acre for 2007, $60 for 2008, $40 for 2009 and $10 for 2010.
“However, there’s a $750 million cap on the settlement.
So, the initial market-loss payments will be slightly less than (the aforementioned numbers). … We won’t know that until after the Pot Two and Pot Three claims are processed (which likely won’t happen until mid-2012). After all the claims are processed for all three pots, the claims administrator will add up how many valid claims there have been. If those equal more than $750 million, then the first reduction in payments to get back down to the cap is to reduce the market-loss payments by about 3.2 percent.”
That’s why “the initial (market-loss) payments are slightly less: $116.13 per acre in 2006, $77.42 for 2007, $58.06 for 2008, $38.71 for 2009, and $9.68 for 2010. Those amounts are the minimum farmers will receive.
“If it turns out the $750 million cap is not exceeded, then there will be a later market-loss payments to farmers to make up the” original amounts.
“The good news for farmers, right now, is that during the holiday season they have assurance that the lion’s share of the settlement – the market-loss money – will be (dispersed) shortly after the first of the year.”
On Pot Two claims…
“The Pot Two claims period is still open. The deadline to submit claims is Jan. 13.
Pot Two is the simple way for farmers to collect ‘other losses’ that they’ve suffered. Most of those were suffered by farmers who planted one of the two contaminated varieties in 2006. They had damages flowing from that; they couldn’t plant rice on the same ground the next year and had to clean equipment – get every grain of rice out of every crevice – to ensure their 2007 crop wasn’t tainted. Those are the types of losses we’re talking about.
“So, with Pot Two, for every acre of rice you can show were planted in Cheniere or CL131 in 2006, you get $100. A lot of the Pot Two claims have already been filed.
“There is a $70 million cap on Pot Two claims.”
On Pot Three claims...
“The Pot Three deadline is 30 days after Pot Two’s. There is a $50 million cap on the pot.
“Pot Three is set up for those with additional losses. If they want to take the time and effort to prove those losses – and they think than they’re more than $100 per acre planted in Cheniere or CL 131 – Pot Three provides the opportunity to ‘prove up’ damages other than market losses.
“For Pot Three, if Bayer doesn’t agree with the amount claimed, the (parties) go to binding arbitration.”
Punitive damage ruling, taxes
Update on Arkansas Supreme Court decision regarding punitive damages …
“The Arkansas Supreme Court has affirmed the trial court judgment, which was close to $50 million. That case was separate from the settlement we’ve been talking about.
“The trial court had found unconstitutional the state law that capped punitive damages to around $1 million. The state supreme court affirmed that and said ‘the trial court was right. This is unconstitutional.’ Therefore, the full punitive damages were awarded.
“In addition to the benefit that will provide to the Arkansas rice farmers in that case, there was also a second case where Riceland Foods sued Bayer. They received a $100 million-plus punitive damage judgment. So, that (supreme court ruling) was also good news for Riceland, as well.
“There are a lot of members of Riceland. This is great news for them.”
More on the claims process…
“Some of the submitted claims haven’t yet been certified as being complete. The claims administrator has gone through each claim and looked to see if all the I’s are dotted and T’s crossed. Are all the signatures on the releases at the right place? Has the right person signed them? Have they claimed the proper amount under the forms?
As you’d expect with such a high number, some of the claims were found to be deficient. Once a deficiency notice goes out, the claimant has 60 days to cure the deficiency.
“So, one of the reasons some of the claims haven’t been certified is they’re still going through the deficiency cure process.”
What is the actual number – either in farmer numbers of farming entities – filed?
“More than 10,000 farming entities submitted claims. But as you know, some farmers have multiple entities they farm through. So, it’s hard to boil it down to the exact number of farmers.”
On tax implications of the settlement funds…
“A lot of (rice farmers) have asked questions about when the money will reach them. For tax purposes, will it be 2011 income? Will it be 2012 income for tax purposes?
“Right now, it looks pretty clear based on the timing of everything that the money will not flow until January of 2012. Farmers should know that if they’re doing any tax planning.”